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1993 (2) TMI 339

..... han and N.G. Venkatachala, JJ. JUDGMENT L.M. Sharma, J. 1. The writ petition and the transferred cases challenge the validity of Handlooms (Reservation of Articles for Production) Act, 1985 (22 of 1985) (hereinafter referred to as the Act) and the order bearing No. DCP/BNP/l (2) 1986 dated 4th August, 1986 issued under Sub-section (1) of Section 3 of the Act. This Act is to provide for reservation of certain articles for exclusive production by handlooms and for matters connected there with. On 31st of March, 1986, the Act came into force. Section 4 of the Act provides for Constitution of an Advisory Committee to make recommendations to the Central Government to determine the nature of any article or class of articles that may be reserved for exclusive production by handlooms. On 2nd June, 1986, in exercise of the powers conferred under Section 4 of the Act, the Central Government constituted an Advisory Committee. The said Advisory Committee submitted its recommendations. After considering those recommendations the impugned order dated 4th of August, 1986 was issued directing "certain articles/class of articles to be exclusively reserved for production by handlooms". It .....

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..... velopment Regulation act". The Cotton Textile Commissioner while issuing orders under Clause 20 is enable to augment production of handloom industry. Therefore, this order cannot operate against the same. 9. Under Section 3 of the Act, the authority only looks at the handloom industry while under Clause 20 the cotton Textile Commissioner must have regard to the over all textile industry. Hence, the Notification under Section 3 is ultra vires of Clause 20. 10. The subjective satisfaction of this Advisory Committee constituted under Section 4 alone is taken into consideration without regard to the petitioner's representation. This is bad in law in view of V.G. Row's case (supra). The same view was reiterated in Virendra v. State of Punjab [1958] 1 SCR 308 . 11. By the impugned order there is a serious dislocation of powerloom industry and substantive rights guaranteed under Article 19(1)(g) of the Constitution have been violated by Sections 3, 4, 5 and 18 of the Act. Such restrictions amounting to prohibition have been struck down by this Court in Mohd. Faruk v. State of Madhya Pradesh [1970] 1 SCR 156 and Municipal Corporation of the City of Ahmedabad v. Jan Mohammed Us .....

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..... ment submits that the Government studied the over all problem of textile industry for a number of years. In 1964 the power loom inquiry was constituted. In 1974, a high power Study Team constituted under the Chairmanship of Mr. B. Sivaraman, the then Member, Planning Commission made the following observation in respect of effect of power looms and the employment in the handlooms sector in their report: Every new power loom itself put out of action six handlooms in the country. A handloom actually is a family industry and not an individuals field alone. When National Policy is to support the expansion of the rural industry of handloom in order to give more employment in the rural sector, we shall be working at cross purpose in encouraging at the same time power looms to displace a large number of handlooms. Then, a Study Group was constituted in 1981. An Expert Committee was constituted to go into handloom, power loom and textile mill industries. Based on this, from time to time, textile policy statements were issued. In the year 1981 and 1985, it is found that next only to agricultural sector, handloom sector provides major rural employment. Therefore, the impugned Act is a product .....

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..... eave a power loom it becomes very difficult to establish whether these were produced in a unit with more than four power looms or in a smaller unit. As a result, the protection supposed to have been given to the handloom sector by reserving certain items of production for the sector has been substantially only on per and the power loom sector has been producing the reserved items whenever it has found it profitable to do so. The Team recommends that the eight items which are also open power loom units with four looms and less shall be reserved exclusively for the handloom sector. 23. The government of India appointed a Study Group on "Reservation of Handlooms" on 12th August, 1980 under the Chairmanship of Textile Commissioner who has given the following recommendations in respect of certain articles for exclusive production by handlooms: It may be true that owing to the dispersed nature of the industry, the much needed orientation of production to market need is very much wanting in the handloom sector. Yet more important is the inherent technological disadvantage of the handloom sector and the unequal competition that it has to face from the mill and power loom sector o .....

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..... or handlooms. During the VIIth Plan emphasis would be laid on cooperativisation and development of handlooms through Central State level corporations, modernisation of looms and provision of technological inputs, ensure adequate availability of yarn and other raw materials, increase the production of mixed and blended fabrics on handloom, design support to improve the competitiveness of the product so as to eliminate the cost of handicap of the handloom vis-a-vis powerlooms, improve marketing and infrastructure support and strengthen the data base. Reservation would continue under "Handlooms (Reservation of Articles for Production) Act, 1985". The provision of the Act would be enforce and the machinery for this purpose suitably strengthened. New Spindleage would be installed in cooperative sector to the extent possible. To improve the welfare of the handloom weavers, a contributory thrift fund scheme and worshed-cum-housing scheme would be taken up in the Seventh Plan. 26. Due to the recommendations of the various committees under the textile policy statements announced by the Government from time to time, the reservation of certain articles for production of handloom had .....

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..... der the Essential Commodities Act had been challenged in various courts of law. Though their validity had been uphold it is considered desirable to have a separate legislation so as to obviate the possibility of further litigation which may seriously affect the implementation of the reservation orders. A study group appointed by the Government to go into this question has also suggested that it would be desirable to have a separate legislation. It has been decided to accept this recommendation, this question has also suggested that it would be desirable to have a separate legislation. It has been decided to accept this recommendation. The Bill apart from enabling the Central Government to reserve by notified order certain articles or class of articles for exclusive production by handlooms after taking into consideration the recommendations of an Advisory Committee constituted under the provisions of the Bill, provides for prohibition of manufacture of such articles of class of articles by powerloom or the other sectorism penalties for the contravention of the provisions of the order and other matters necessary for implementing the provisions of the Bill also provides forgiving an e .....

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..... s declared by Parliament by law to be expedient in the public interest. Section 2 of the said Act reads: Declaration as to expediency of control by the Union- It is hereby declared that is expedient in the public interest that the Union should take under its control the industries specified in the First Schedule. 32. Section 3 is the definition section. In Clause (h) it defines "Schedule" meaning a Schedule to this Act, while "schedule industry" is defined under Clause (i) meaning any of the industries specified in the First Schedule. Item 23 of First Schedule is defined as under: 23. TEXTILES (INCLUDING THOSE DYED, PRINTED OR OTHERWISE PROCESSED): 1. made wholly or in part of cotton, including cotton yarn, hosiery and rope; 2. made wholly or in part of jute, including jute twine and rope; 3. made wholly or in part of wool, including wool tops, woollen yarn, hosiery, carpets and druggets; 4. made wholly or in part of silk, including silk yarn and hosiery; 5. made wholly or in part of synthetic, artificial (man-made) fibres, including yarn and hosiery of such fibres. 33. The impugned Act is traceable to Items 24 and 27 of List II of the 7th Schedule of the Consti .....

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..... y enactment other than this Act. In other words it declares that if there is any repugnancy in an order made under Section 3 with the provisions of any other enactment, then notwithstanding that inconsistency the provisions of the Order will prevail in preference to the provisions 55 of other laws which are thus inconsistent with the provisions of the Order. 41. In dealing with the validity of Sugarcane control Order, 1955 this Court observed in Ch. Tika Ramji's (supra) case as follows: The relevant Entries in the respective Lists of the Seventh Schedule to the Constitution are as follows: List I, Entry 52: Industries, the control of which by the Union is declared by Parliament by law to the expedient in the public interest. List II. Entry 24: Industries subject to the provisions of entry 52 of List I. Entry 27: Production, supply and distribution of goods subject to the provisions of entry 33 of List III. List III, Entry 33: As it stood prior to its amendment: Trade and commerce in and production, supply and distribution of, the products of industries where the control of such industries by the Union is declared by Parliament by law to be expedient in the public interest. Entr .....

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..... I and the products of the industry would also be comprised in Entry 27 of List II except where they were the products of the controlled industries when they would fall within Entry 33 of List III. This being the position, it cannot be said that the legislation which was enacted by the center in regard to sugar and sugarcane could fall within Entry 52 of List I. Before sugar industry became a controlled industry, both sugar and sugarcane fell within Entry 27 of List II but, after a declaration was made by List II but, after a declaration was made by Parliament in 1951 by Act LXV of 1951, sugar industry became a controlled industry and the product of that industry viz., sugar was comprised in Entry 33 of List III taking it out of Entry 27 of List II. 43. Therefore, where the Cotton Textile Control Order deals with the productions while the impugned Act is an Act which deals entirely with handloom. The order issued under Section 3 of the Act is only for protection and development of handloom industry. There is no question of both the Cotton Textile Control Order and the impugned Order operating in the same field. 44. Hence, this argument is rejected. 45. The next argument is that Clau .....

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..... nter to Clause 20 of Cotton Textile Control Order. 48. Accordingly, this argument is rejected. 49. Now we will examine the question whether the Act and the order are violative of Article 19(1)(g) of the Constitution? 50. According to Mr. Krishnaswami, learned Counsel, if there is a total reservation so as to create a monopoly that would be bad in law. He relies on decision in State of Rajasthan v. Mohan Lal Vyas AIR 1971 SC 2068 . It was held thus: A monopoly right cannot be conferred on a citizen under the Constitution nor can it be justified under the Constitution. 51. This argument, in our opinion, proceeds on a misconception. There is no question of monopoly created in favour of handloom industry. Certain kinds of textiles are reserved to the handloom industry. Still there are number of items available for powerloom owners which they can manufacturer. The items of textiles generally manufactured in the mill and powerloom sectors have been left out from reserved items. Only those items which have traditionally been manufactured on handlooms have been reserved for this sector. As a matter of fact, the reservation orders in favour of handloom have been on the statute book since 19 .....

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..... It is submitted that the items which are generally manufactured in the powerloom sector have not been reserved for handloom sector at the cost of powerlooms or mill sector. The total production of textile sector at the end of Sixth Plan (1984-85) was 11,956 million mitts, of which the share of handlooms was 3514. At the end of Seventh Plan (1989-90) the total production in the textile is estimated at 14500 ml. mts. of which the share of handlooms will be only 4600. These estimated targets indicate that there is sufficient scope for all the sectors including the unorganised powerloom sector to grow during the Seventh Five Year Plan. The differences between the handloom and powerlooms have been defined in the Act itself. The basic difference being that the handlooms are manually operated while the powerlooms are run with the motive force of power. 54. The protection has been given by the Government to handloom weavers because the livelihood of handloom weavers is threatened due to the production of all types of items and varieties by the powerloom industry. It is common knowledge that the handloom weavers are economically very poor and will have no alternative employment in the rura .....

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..... unreasonable competition by big producers, like the petitioner Company. The State has, therefore, made a valid classification between goods produced in big establishments and similar goods produced by small powerloom weavers in the mofussil, who are usually ignorant, illiterate and poor and suffer from handicaps to with big establishments like the petitioner Company are not subject. 58. Equally, Article 46 inter alia requires the State to promote with special care the educational and economical interests of the weaker sections of the people. Therefore, these restrictions can easily be sustained as reasonable since it is in furtherance of the objectives laid down in the directive principles. 59. In view of what we have stated above, even if, these restrictions result in the total exclusion of the powerloom sector that could be upheld as reasonable. In Narendra Kumar's (supra) at page 376 it was held thus: that the word "restriction" in Articles 19(5) and 19(6) of the Constitution includes cases of "prohibition" also; that where as restriction reaches the stage of total restraint of rights special care has to be taken by the Court to see that the test of reas .....

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..... tinued since 1950 for the protection of rural handloom artisans and their continued employment in the industry. Since the Government policy has always been to create more employment particularly in rural areas, it will be unthinkable to imagine the social problems that will be created if the employment of millions of handloom weavers is taken away by allowing powerlooms to produce all items without any reservation. Handlooms and handicrafts are the only traditional cottage industries which provide maximum employment in the rural country-side. 62. Hence, we reject this point as well. 63. It has already been noted from the observations of the high-powered Study Team under the Chairmanship of Mr. B.Sivaraman as to how every new powerloom will put out of action six handloom in the country. A handloom actually is a family industry and not an individual's field alone. 64. This means the families of the poor weavers are ruined by encouraging power-loom. It may be tat the cost of production in the powerlooms sector is less but if it is the object of the Government to encourage handloom for continued employment of handloom weavers in rural areas, certainly, nothing worthwhile can be sai .....

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..... r views before the sub-committee during its sittings at madras and Bangalore. Thus, it will be amply clear from what has been stated above that the interest of the powerloom sector has been taken into account and powerlooms were represented albeit indirectly on the Advisory Committee. 68. Moreover, the sub-committees formed by the earlier Advisory Committee had visited many a places in the country and discussed the matter with officers of the state Governments and met provisions representing different textile sectors. Apart from the reports received from the sub-committees, the representations received by the Government from various textile interests were duly considered by the Advisory Committee before making their recommendations. It is therefore, incorrect to say that proper opportunity was not provided to the petitioners for making representations. 69. It is important to note that in the Advisory Committee the representatives from the powerloom sector, mills sector and powerloom silk sector have been specifically included. Therefore, it is meaningless to state that no opportunity was afforded to powerloom sector and that under Section 3 of the impugned Act regard is had only to .....

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